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Senate Standing Committee on Economics

Inquiry intoAffordable HousingSubmission by the Housing Alliance

of NSW community housing providers

Armidale, Deniliquin, Lismore and Orange



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Submitted by the Housing Alliance:

Homes Out West Housing Plus

Homes North North Coast Community Housing

Contact: Maree McKenziec/o Homes North17/93 Faulkner Street, Armidale NSW 235002 6772 [email protected]

Prepared with assistance from the Housing Action Network

Contact: Tony Gilmour, [email protected]

Cover photograph: new affordable housing by Homes North





Housing Alliance | Operating locally, collaborating regionally

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Table of Contents

1 Regional housing issues ................................................................................. 5

1.1 Housing markets .................................................................................................. 5

1.2 Housing affordability ............................................................................................ 6

1.3 Regional social issues ......................................................................................... 7

2 Community Housing’s contr ibution .............................................................. 10

2.1 Why community housing? .................................................................................. 10

2.2 Sector growth .................................................................................................... 11

2.3 Scale and capacity............................................................................................. 12

2.4 Community housing in regional areas ................................................................ 13

2.5 Introducing the Housing Alliance ........................................................................ 14

2.6 Section conclusions ........................................................................................... 16

3 Our recommendations ................................................................................... 17

3.1 Improving coordination, providing leadership ..................................................... 17

3.2 Efficient social housing delivery ......................................................................... 19

3.3 Developing our role as community anchor ......................................................... 22

3.4 Broadening the funding base ............................................................................. 23

3.5 Section conclusions ........................................................................................... 26




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1 Regional housing issues

Challenges with affordable housing supply, and soc ial housing delivery, are not

just an issue for our large capital c it ies. Al though reg ional areas face increasing

problems with housing markets, and often high levels of housing st ress, most

polic ies have been directed towards urban centres. The Housing Alliance

understands regional issues, and acts as a champion for these communities

The four members of the Housing Alliance

operate away from metropolitan Sydney.This section reviews housing issues relating

to regional areas, showing how affordability

issues are subtly different.

In this submission we use the term ‘social

housing’ to mean accommodation that is

heavily subsidised by taxpayer funds. Social

housing is owned and managed by State

Government (‘public housing’) or by not-for-

profit providers (‘community housing’).

A more general term is ‘affordable housing’,

referring to rented or owned housing where

residents pay less than 30% of their

household income on housing costs.

1.1 Housing markets

Analysis of Australia’s housing markets

largely focuses on metropolitan areas, to

the detriment of knowing the impact of

affordability and housing supply and

demand in regional markets.

In one of the few studies with a focus on

rural and regional centres, Professor Beer

in 2011 identified that regional Australia has

faced a similar trend to larger cities in terms

of the rapid escalation in house prices and

rents in the period since 2000.

In a number of regional areas the ‘resource

boom’ has led to distortion of housingmarkets. Although this is most commonly

associated with Queensland and Western

Australia, certain parts of states such as

have been also been impacted.

Regional areas where the resource sector

has expanded operate a two-tier housing

market. Part of the market is focused on

high income, often temporary, resource

workers; while the established populationworking in support industries or not

employed must compete for properties at

the lower end of the housing market.

Housing supply

In both regional and urban areas, a major

factor reducing the affordability of housing

has been the failure of housing supply to

keep pace with housing demand.

There are a range of special factors that

impact particularly on increasing housing

supply in regional areas:

• A lack of house-building economies of

scale in regional Australia is a barrier to

delivering new housing. The skills and

labour force shortage contribute to the

cost of building, a particular factor in

areas impacted by the resource boom.




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• Local councils in the regions are not

always favourably disposed to new

affordable housing, and planning delays

can occur. Few councils have affordable

housing strategies.

• New land release may be limited in

regional areas, and NIMBY opposition

to developments can be strong.

• There is often a mismatch between

consumer demand and the type of land

released. To promote more affordable

housing options, a greater variety in lot

sizes and densities is needed.

Housing stock and tenure

Regional areas have a lower diversity of

building types than larger cities. The main

form of property is the free-standing house,

and the most typical configuration has three

or more bedrooms. There are fewer small

properties with one or two bedrooms, and

higher density and co-joined houses are

comparatively rare.

We have provided specific examples of

regional housing markets based on the

areas where Housing Alliance members

operate. The areas are shown in Figure 2.

Table 1 shows the tenure mix in regional

NSW where we are based. Generally the

level of ‘owner occupation’, a term including

households paying a mortgage, is at or

slightly ahead of the NSW average of 66%.

Table 1: Regional housing tenure, 2011

Owners Socialrenters

New England NW 66% 4.9%

Murray 68% 3.6%

Central West 69% 4.8%

Richmond-Tweed 67% 3.6%

NSW 66% 5.1%

Source: ABS 2011 Census, Statistical Area Level 4,

covering largely the regions covered by Alliance members

By contrast, the proportion of social housing

is lower in the four areas than the average

for NSW. Social housing stock is particularly

low in the Murray region and Richmond-

Tweed (Far North Coast). Also, within these

quite large regions, social housing is often

not located where it is needed.

Mainly as a result of the relative shortage of

social housing, there are long waiting times

for applicants. Table 2 shows waiting time

for a number of key towns in the areas

where Housing Alliance members operate.

Very few areas have waiting times under 2

years, and there are some locations where

a 10 year wait might be necessary.Probably the most challenging situation is in

the Far North Coast region.

Table 2: Social housing waiting times, 2012

Bedrooms 1 2 3 4

Armidale 2-5 2-5 2-5 0-2

Bathurst 2-5 2-5 2-5 2-5

Lismore 5-10 5-10 2-5 5-10

Mullumbimby 10+ 10+ 10+ 2-5Orange 2-5 2-5 2-5 2-5

Tamworth 2-5 2-5 2-5 2-5

Young 5-10 2-5 5-10 2-5

Source: Housing NSW data. Waiting time in years

1.2 Housing affordability

Housing affordability is a function of both

housing costs and household income.

Housing stress is a specific measure of the

extent to which lower income households

face unaffordable housing costs (rent or

mortgage payments). The usual benchmark

for affordability is that households paying

more than 30% of their gross income for

housing costs are in ‘stress’.

Levels of housing stress in regional NSW

are shown in Table 3. Apart from in

Richmond-Tweed, the proportion ofhouseholds in rental and purchase stress is




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lower than the average for NSW. However,

housing stress levels still remain significant.

There is a higher proportion of renters

facing housing stress than purchasers in

regional areas. This may be linked to therelative shortage of social housing where

rents are controlled, and also few investors

to fund new private rental dwellings.

Table 3: Regional housing stress, 2011

Renters instress

Buyers instress

New England NW 9.1% 6.4%

Murray 8.3% 6.8%

Central West 7.9% 6.7%

Richmond-Tweed 14.0% 10.1%

NSW 11.6% 10.5%

Source: ABS 2011 Census. Percentage of households

paying more than 30% of household income on householdcosts (rent or mortgage payments respectively)

Income levels

Table 3 highlights evidence of market failure

in the rental market and concern about theability of low income earners to access

affordable rental housing and transition from

rental into home ownership in the short and

longer term. One of the issues is the

household income differential between

urban and rural areas.

Table 4: Regional household income, 2011

Incomes

under $600pw

Median

householdincome pw

New England NW 32.2% $902

Murray 31.6% $921

Central West 30.8% $973

Richmond-Tweed 33.3% $865

NSW 24.2% $1,237

Source: ABS 2011 Census

Table 4 shows the high proportion of low

income households in the four selectedregional areas. Around a third of

households have income below $600 per

week, compared to a quarter across NSW.

Median household income is also only

around three quarters of the NSW average.

Regional migration

Although the four Housing Alliance

members are in regional locations, some of

these areas are close enough to population

centres to grow through ‘sea change’ and

‘tree change’ migration. New purchasers

can afford higher prices, leading to faster

price inflation. Many properties are

purchased as second homes, and the 2011

Census has shown a growth in unoccupiedproperties, particularly in coastal NSW.

Although retirees are a large part of the sea

change movement, they are not the only

component. Many new residents moving to

coastal areas are younger than the NSW

average, and considerably younger than the

local population of these areas.

In fast growing resource-boom areas and

along the coastal strip of NSW some long-

term renters, including Indigenous people,

have been forced to rely on non-standard

forms of accommodation such as garages

or caravans on private property. Some

caravan parks have been sold due to rising

land values in coastal areas, further

reducing amounts of affordable housing.

1.3 Regional social issues

A factor affecting demand for social and

affordable housing is social disadvantage. A

widely-used measure of social

disadvantage is the ABS SEIFA (Socio

Economic Index for Areas) data.

The index measures relative disadvantage

based income, education, housing quality,

unemployment and other factors. LowerSEFA scores indicate higher disadvantage




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Box 1: NCCH - working in partnership

North Coast Community Housing (NCCH) is a non-profit housing company providing social andaffordable, community-based rental housing forpeople in housing need and on low or moderate

incomes. They provide housing in council areas ofNorthern NSW including Clarence Valley Shire,Richmond Valley Shire, Kyogle Shire, Ballina Shire,Byron Shire, Lismore and Tweed Valley Shire.

The organisation has a head office in Lismore and branch offices in South Tweed Heads andGrafton. It is Class 2 registered community housing provider and fully accredited against thenational community housing standards. NCCH is managed by a Board of Directors and the day-to-day operations are carried out by permanent staff of 26.

Over the past 29 years, NCCH has formed successful partnerships with a wide range of supportagencies throughout the region. These partnerships are set up to ensure that vulnerable and highneed people are able to enjoy sustainable tenancies. Over 10% of tenants require varying levels offormal support with their living arrangements to enable them to live independently.

The property portfolio of the company seems set to continue to grow. During 2012-13, NCCHcommenced the development of new social housing dwellings and also delivered its first homesunder its Affordable Housing Program. This program is aimed at key workers unable to affordaccommodation located close to their place of employment.

NCCH works in a range of formal partnerships with support services providers to ensure that thosemost vulnerable in our community have access to local social housing. The partnerships, whereNCCH deliver tenancy and property management services (generally from properties within itsexisting portfolio) whilst the support provider delivers ongoing support/care services to the tenant,are conducted according to management and service arrangements that best promote thesustainability of each tenancy.

In 2010, NCCH established their Housing Partnerships Program in order to progressively increasethe total number of properties being managed under formal agreements with support providers. Inaddition to assisting more people who required ongoing support to sustain a tenancy, the programensures that:

• There are clear criteria for the approval of new projects (including criteria for expandingarrangements with existing partners).

• There will be improved forward planning, in relation to the number of properties being allocatedto the program each year, so new projects could be more strategically developed with bothexisting and new partners.

• The program will be more heavily promoted in the community, in order to ensure access topartnerships included all local agencies who had an interest in (and the resources required tocommit to) a supported housing partnership with NCCH.

The most recent SEIFA data is based on

the 2011 Census, and shown for NSW in

Figure 1. The operating area of the four

Housing Alliance members is shown in

yellow. Many locations where the

organisations operate are in SEIFA classes

1-3, the 30% most disadvantage areas in

Australia. Very few areas served are in the

30% least disadvantaged areas of Australia.

Figure 1 demonstrates the concentration of

disadvantage in remote and regional areas

in NSW. Most areas that are relatively

advantaged are in the major cities and

along parts of the coastal strip.

As a result of higher levels of social

disadvantage, community housing providers

that operate in regional areas face a series

of additional challenges. Some of these




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emerge from particular issues facing

regional and remote areas:

• Population movement have challenged

existing social services both in terms of

demand for service, as well as thevariety and complexity of services

needed. Gaps in service provision are

harder and more costly to address in

areas with a dispersed population.

• Recent regional population growth has

not always been accompanied by a

similar rise in the number of jobs. Many

of the newer local jobs in the agricultural

and service sector are low paid.

• Many regions are characterised by

smaller towns and villages with poor

public transport links. Lower income

people living in areas of high social

disadvantage may not be able to easily

and affordably travel to parts of the

region where there are jobs.

• The geographic spread of people

requiring care, and the time and cost oftravelling to reach them, is a major

barrier for delivering outreach health

care services in the regions. Regional

areas have a higher proportion of older

people, and this is projected to be a fast

growing cohort in the future.

• There is a significant Indigenous

population in many regional centres.

Issues of racial discrimination andsevere disadvantage due to high levels

of unemployment make it difficult for

Indigenous people to compete at the

lower end of the housing markets.

Figure 1: Regional locations and disadvantage

Source: ABS 2011 Census. Modelled by the Housing Action Network using Google Earth




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2 Community Housing’s contribution

Austral ian states and terri tories, along with many countries overseas, are

recognising the role community housing organisations can make to increasing

housing supply and more effectively managing social housing. In regional areas,

community housing prov iders are even more vital - often they are significant

contr ibutors to the local community and can give leadership and vision

Community housing is affordable rental

housing provided by not-for-profitorganisations at below market rent for low

to moderate income tenants. It forms an

integral part of Australia’s housing system

by providing housing options that are

reasonably priced, secure and responsive

to the needs of the neighbourhoods in

which the organisations operate.

2.1 Why communityhousing?

Contemporary community housing groups

are run by professional managers, and

supervised by highly skilled boards. Most

directors are business people, lawyers,

accountants and human service experts.

They are also comprehensively regulated

by State Government.

Local accountability

Housing Alliance members are accountable

to their regional communities, to State

Governments and to their customers for the

effectiveness of the service provided and

their use of public funds.

Unlike the larger and centrally controlled

State Housing Authorities, communityhousing providers can be more locally

responsive. They work closely with local

service agencies and not-for-profit partners,building social cohesion in what were once

challenging neighbourhoods.

Professional housing delivery

During the last decade the role of Australian

community housing providers has been

transformed, following similar patterns seen

in North America and Europe.

Regional housing providers such as

Housing Alliance members have retained

their community focus, while becoming

increasingly professional and innovative:

• Many community housing providers

have raised private finance, increasing

the pot of money available to invest in

affordable housing without increasing

government debt.

• In larger cities and regional areas,

community housing organisations have

led the transformation of troubled public

housing estates. Many organisations

are skilled at working closely with

partners from the public and private

sectors, and with traditional not-for-profit

welfare agencies.

From regular independent surveys of socialhousing tenants by AIHW, community




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housing providers are rated as being better

landlords. In 2011-2012, the level of

satisfaction with services provided was 84%

for NSW community housing, compared to

73% for public housing.

Community housing is popular with both

social housing tenants, as well as being

better for the housing system.

Building strong communities

Although community housing’s core

business of providing affordable rental

accommodation reduces social exclusion,

many organisations go further.

Following approaches popular in both

Britain and the US, many Australian

organisations work closely with other not-

for-profit organisations and government

agencies to help tenants find work, build

skills and stabilise their family situation.

British research positions housing

associations as ‘community anchors’ in the

neighbourhoods where they operate.Though housing providers cannot provide

all the answers, they are often best placed

to bring together the services of a number

of different agencies.

Community housing providers often

establish social enterprises, involve tenants

in the running of their operation and

innovate with new forms of service delivery

and neighbourhood support. They integratehousing with human service support more

effectively than if delivered direct by the

public sector. Service delivery is also

tailored to specific local conditions.

A sustainable model

Reports by Auditor Generals in Victoria

(2012) and NSW (2013) noted public

housing stock is ageing and increasingly not

fit for purpose. There is not enough funding

available for necessary planned

maintenance and as a result houses have

to be sold to meet funding shortfalls.

The portfolio faces simultaneous problemsof both under-occupancy in some locations,

and over-crowding in others. For example,

in 2012, there were 112,310 public housing

dwellings available to tenants in NSW.

However, there was a waiting list of 55,186

eligible applicants in housing need that

could not be provided for.

All State Housing Authorities run annual

deficits, even after reducing maintenanceexpenditure to less than required to

maintain asset quality. Without increased

funding, people’s living conditions will

continue to deteriorate and more properties

will need to be sold. This will lead to even

longer social housing waiting lists.

State Housing Authorities have suffered

over decades from restricted funding. By

contrast, community housing organisationscan capture CRA for their properties.

Cashflow surpluses generated per property

can be used to raise bank finance, secured

against the property asset. Loans then fund

meeting the backlog of repairs.

Community housing providers also operate

as independent businesses, therefore need

to be run efficiently so that they can remain

viable. Their annual reports are available for

public and stakeholder inspection.

2.2 Sector growth

With the support of the Commonwealth and

State governments run by both political

parties, there has been a significant

increase in the number of properties

managed by the community housing sector.






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management outsourcing contracts in

Queensland and South Australia, and this

risks draining resources funded by their

home State Government.

A 2007 report in Britain by the Chartered

Institute of Housing noted ‘we have found

no compelling evidence that size has real

benefits in terms of the efficiency of

organisation, better delivery of services or

costs of borrowing. Indeed it appears from

the evidence above that a focus on

outcomes and effective management is

more important than structures’.

Mergers

Mergers have been a significant factor in

the consolidation of the Australian

community housing sector. However, there

is a danger that enlarged organisations will

lose touch with the communities in which

they operate, focusing more on finances

and branding than tenants.

Overseas experience from Britain and the

Netherlands, two countries with large

community housing sectors, suggests

mergers do not often deliver the anticipated

benefits. There is declining support for

mergers, and the focus is more on re-

establishing links to local communities.

As will be described later in this submission,

the Housing Alliance was formed so that

four organisations can achieve economies

of scale without losing local connections.

2.4 Community housing in

regional areas

The operating areas of the four Housing

Alliance members are shown in Figure 2.

Figure 2: Regional locations of Housing Alliance members

Source: ABC 2011 Census

NCCH

Homes North

Housing Plus

Homes Out West




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Regional housing markets can be analysed

using ABS standard ‘remoteness’

definitions. Areas are then classified in five

categories, as detailed below for NSW:

• Major cities: metropolitan greaterSydney, the Central Coast, the Lower

Hunter, Wollongong and Tweed Heads

• Inner regional: generally the NSW

coastal strip, and regional towns such

as Tamworth, Orange and Albury.

• Outer regional: regional areas generally

in western NSW.

• Remote and very remote: areas in thewestern half of NSW.

Most Housing Alliance community housing

is provided in Inner Regional and Outer

Regional areas, especially for Housing Plus

and Homes North. NCCH operate more in

Inner Regional areas, and Homes Out West

provide housing in both Regional and

Remote areas.

According to data from AIHW, in June 2011

around one third of NSW community

housing was in major cities, a similar level

for Australia as a whole (Table 6). This

proportion has remained steady for a

number of years. However, renewal efforts

to transform social housing estates have

largely been concentrated in the cities.

Table 5: Regional community housing, 2011 Area Number Share

Major Cities 39,290 66%

Inner Regional 13,342 22%

Outer Regional 5,600 9%

Remote 1,004 2%

Very Remote 541 1%

Source: AIHW ‘Housing Assistance’ survey, as at 30 June

There are just under 19,000 community

housing homes in Inner Regional and Outer

Regional areas of Australia. As shown in

Table 6, one third of all community housing

is located away from major cities

Issues facing regional providers

All Australian community housing

organisations operate in a complex and

changing policy environment. Tenants have

increasingly challenging needs, housing is

in short supply, and funding restricted.

However, there are additional issues facing

regional housing providers:

• There is pressure from State

Government to increase social andaffordable housing delivery. But in

regional areas there are fewer scale

economies for development and

delivery costs are higher.

• Regional land values are lower than in

major cities, making it less likely that

the planning system can be used to

partially fund new affordable housing.

Local planning controls also favour

lower density development projects.

• It can be difficult to source community

housing staff members in regional

areas, particularly those with specialist

and senior management skills.

• Regional housing providers often

provide housing over large geographic

areas, increasing the cost of delivery.

There is often a need to open smallregional offices, which are complex

and expensive to operate.

2.5 Introducing the Housing

Al liance

The Housing Alliance was established in

2010 by four regional NSW community

housing organisations each managingbetween 450 and 870 tenancies each.




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Box 3: Homes Out West - leading practice in property improvement

Homes Out West is a leader in social housing provision in the south western Riverina region ofNSW. The organisation delivers affordable housing to those most in need across 11 ruralcommunities along the Murray River, bridging an area of some 700km between Albury in the eastand the South Australian border in the west. They have a board of seven directors who oversee

the governance of the organisation. Their directors, staff and contractors, are local to thecommunities served. Homes Out West currently manage a portfolio of approximately 450properties. This entails a mix of capital properties, fee for service and leasehold properties.

Homes Out West’s operations reflect their values in respect of the diversity, equality and rights ofpeople; working as a community on common issues; displaying integrity, transparency andaccountability; promoting quality and equity in our work, our houses and people’s lives; andproviding long term safety and security through the housing product we deliver.

They have strong partnerships with many service providers across the region to assist support ourtenants and enhance their lives. Key partnerships have been developed through our co-locationoffice arrangements with other service providers in Deniliquin and Albury. This office ‘hub’arrangement offers a one-stop-shop service to our tenants and potential applicants and augmentsour position as a leading ‘community anchor’ in the lower Riverina region. This innovativeexample has been recognised by the NSW Registrar of Community Housing as best practice.

Property innovation

The organisation has undergone a period of massive growth in recent years primarily due to thesector wide reform initiative of the property transfer program. This resulted in Homes Out Westacquiring a portfolio with a strong dominance of aged fibro cottages, presenting challenges inrelation to maintenance liabilities and a variance between housing product and demand.

Homes Out West undertook a significant piece of work in developing a Dwelling Decision Tool toproduce a detailed assessment of the environment surrounding the organisation’s assetsalongside an analysis of current assets and if they are ‘fit for purpose’. The innovative tool hasbeen used to indicate which properties are performing well and meeting clients and the broaderregions current housing needs. The Tool is reviewed and refined on a three year cycle to maintain

relevance with the changing environment.

Six pilot properties with differing design features and across various locations were selected as asample. The pilot properties were initially technically inspected by Homes Out West and severalindependent architects with concepts collected on best practice for sustainable improvements.Input was gathered also from interested tenants through a tenant forum.

A range of initiatives were raised, with all options being assessed on their ability to address theproject objectives. Initiatives included increased insulation, external cladding, roof exhaust vents,skylights, blinds, ceiling fans and solar hot water. The evaluation process, undertaken aftereighteen months of tenants living in the modified properties, outlined a range of recommendationson ways the portfolio could be improved in line with the project aim.

Before After




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By establishing a ‘middle path’ between

independence and merger, the Housing

Alliance is following an approach that has

been tried and tested overseas.

Housing Alliance members work in housingmarkets with different dynamics to

metropolitan areas. For example, three

member organisations operate in low

demand, low value markets that correlate

with high levels of disadvantage. These

markets are seen to be less of a focus for

State Government than capital cities.

Scale and effic iencies

When viewed as a collectively, the Housing

Alliance manage nearly 3,000 homes. This

makes the Alliance the fourth largest

community housing operator in Australia.

The Housing Alliance is principally a

networking organisation sharing best

practice, and working to jointly procure

goods and services where there are cost

savings. It also lobbies stakeholders to raise

the profile of issues faced in regional

housing markets and communities.

Some examples of Housing Alliance

efficiencies include jointly procuring

consultancy, IT procurement and research

activities. In effect advice can be sourced at

one quarter the cost of single procurement.

There is also collective working on policy

reviews, marketing, conference attendance

and website development.

Community vision

The corporate leaders of the Alliance

organisations share a similar vision,

particularly around maintaining strong

community links and remaining as

independent organisations.

Housing Alliance members act as

‘community anchors’ in the regions in which

they operate. Links with partner service

providers and councils are important as well

as looking to increase portfolio sizes.

By sharing procurement of goods and

services, the Housing Alliance has gainedmany of the economic benefits of being a

single merged entity. Consultancy, legal,

technical and other costs have been spread

across four organisations. Knowledge has

been shared, and ‘virtual capacity’ built.

2.6 Section conclusions

With the right Government policy settings,commercially experienced community

housing providers can form the bedrock of a

sustainable social housing system.

Once property management is transferred

to the community housing sector, property

maintenance backlogs can be cleared

through a blend of current public subsidy

and private finance. Quality tenant

outcomes can be achieved, and tenancymanagement delivered at lower cost.

Australian capital cities have seen fast

growth over many decades, though around

one third of the population still live in

regional areas. What is needed in the

regions are strong community based

organisations that can work in partnership

to deliver Government’s policy objectives.

Local people often know best what theissues are where they live, and what

solutions are needed and will work. Housing

Alliance members benefit from scale

economies, and professional management,

but are run locally. This type of organisation

is well placed to address regional social and

affordable housing challenges.




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3 Our recommendations

Community hous ing organisations can be key partners in delivering Government’s

objectives of improving affordable housing supply and making social housing

sustainable. The main need from the Commonwealth is for clear leadership and, and

supporting innovation with new intermediate housing products and raising external

finance. In regional areas, where the Alliance operate, community housing providers

play an important role in promoting economic growth and social cohesion

We have focussed our recommendationsaround four specific topic areas which we

believe are most likely to benefit, and be

deliverable in, regional Australia.

3.1 Improving coordination,

providing leadership

Over recent years, affordable and social

delivery has become fragmented. There

has been only limited coordination between

the Commonwealth, the States and Local

Government. As a result, despite continued

investment in the sector, outcomes have

often not met Government expectations.

Reforming the NAHA

The Commonwealth’s main role in social

and affordable housing is funding theactivities undertaken by the States, and

providing leadership. This is a role that has

not changed since the Second World War.

Currently the defining policy is the National

Affordable Housing Agreement (NAHA).

The NAHA, in contrast to the earlier

Commonwealth State Housing Agreements

(CSHAs), had a clear focus on addressing

housing affordability issues. However, in

practice, NAHA has been largely ineffectiveand achieved little more than the CSHAs.

The main problem with the NAHA has been

the degree of flexibility given to State

Governments. Each has pursued different

objectives, and often used funding to

continue with costly and bureaucratic

approaches. Data supply is limited, and it is

hard to measure and compare the

effectiveness of Commonwealth funding.

The Housing Alliance believes a reformed

NAHA should focus on improving the

effectiveness of the social housing system,

and require State Housing Authorities to

compete for funds. Through greater

transparency it will be possible to see

which Authority is performing best.

We further recommend that funding for

community housing is separated within the

NAHA, and allocated directly by the

Commonwealth. Targets should be set for

growing the not-for-profit sector, and this

will allow the Commonwealth to better plan

for CRA expenditure.

Government coordination

The welfare benefits system often acts as a

deterrent to families moving to employmentand out of social housing, and this needs




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reform. Furthermore issues such as

taxation have major impacts on affordable

housing demand though are often treated

as being non-housing issues.

We recommend the Commonwealthdevelop an affordable and social housing

strategy that takes into account taxation,

welfare payments and social/affordable

housing subsidies. Even if separately

administered, these three components

need to be carefully aligned.

Regional focus

Over the past five years there has been agrowing realisation that different policies

are needed for regional areas. This has

covered a variety of areas of Government

activity, though not to date housing.

The Housing Alliance recommend that a

small portion of NAHA funds, perhaps as

low as $0.5 million, is allocated to a fund

supporting building the capacity of regional

community housing providers. Funds could

be allocated on a competitive basis, to

encourage innovation and self-help.

Commonwealth Rent Assistance

The funding of community housing

providers is heavily dependent on CRA.

Policy uncertainty about the future of CRA,

especially in situations where tenancy

management has been transferred from

public to community housing, is limiting ourability to raise private finance to fund

developing of new affordable housing.

Transferring tenancy management to

community housing providers has system-

wide benefits and should be encouraged.

Management costs are lower and

transparency increased compared to State

Housing Authorities. We therefore call for

the Commonwealth to review CRA, ideally

increase the value of the benefit, and

provide certainty on its future.

Intermediate housing markets

We believe a ‘whole of government’approach to reforming the housing system

is needed. This issue of social housing

challenges cannot be addressed in

isolation, as currently the ‘housing

continuum’ does not work effectively.

It is important to transform the private

purchase and rental sector, as well as

social housing, so that some tenants

currently in social housing can findpathways out. Social housing has

increasingly become a tenure for life, rather

than a temporary helping hand.

Different approaches are possible. The

Western Australian Government targets a

portion of housing assistance to support

intermediate housing markets, giving

households a chance to move along the

housing continuum towards the private

rental and ownership market, freeing-up

social housing for people in high need.

Western Australia has a range of shared

ownership products, including schemes

allowing public housing residents to buy

their own property (providing more funding

for social housing) or purchasing another

property (so that their existing home

becomes available to someone on the

social housing waiting list).

A portion of NAHA funding each year could

be earmarked for intermediate housing

market products. The AHURI research

institute could be directed to evaluate best

approaches, and pilot projects could be

funded and evaluated. Commonwealth

leadership would ensure change happens,

and allow products such as shared

ownership to be delivered consistently andat scale across Australia.




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Box 4: Supporting clients with mental il lness to live independently

Richmond PRA in consortium with Homes North were selected through an open tender process todeliver new intensive support and accommodation packages which will provide an opportunity formental health clients to exit institutional care and integrate into the community. The fundingincludes a capital grant from the Department of Health to upgrade and redevelop an existing site

managed by Homes North in Tamworth.

This project provides on-site 24/7 support and therapeutic facilities such as gardens and a gym.The support is focused on recovery and includes developing living skills, improving generalwellbeing and participating in the workforce.

Homes North is thrilled to be a partner in this approach and looks forward to providing the clientswith safe and affordable accommodation and the dignity that comes with having a place to callhome. Homes North staff will assist clients learn to sustain their tenancies in a community context.

Homes North staff have seen clients with such needs challenged by the demands of independentliving coupled with insufficient and sporadic support. It is very encouraging to be a partner in aprogramme where clients will be provided with true wrap around services and opportunities togrow. The first clients occupied the renovated property in December 2013 and have commenced

their journey to recovery and independence.The project demonstrates how a Community Housing Provider can work with the not-for-profitsector and Government in an allied sector to achieve holistic outcomes.

3.2 Efficient social housing

delivery

State Housing Authorities are financially

unsustainable. Each year large deficits are

run, and this is likely to increase year-on-year

as the housing stock is ageing and the

maintenance backlog high. Commonwealth

funds are being spent on crisis management,

not delivering a functioning social housing

system across Australia.

Government’s role

State Governments should continue to have a

strong role in steering the social housingsystem. However, their role should be one of

setting objectives, managing subsidies, and

helping coordination, with less of a focus on

direct service delivery.

Currently the roles and responsibilities within

Government are blurred. Community housing

funding and regulation remain in part a

responsibility of State Housing Authorities, the

public housing agencies. It is not possible todetermine whether public or community

housing is more efficient at delivering and

managing social housing.

We recommend transferring funding allocation

responsibility for community housing to the

Commonwealth. Efficiency and effectiveness

KPIs need to be improved such that, over

time, funds will be allocated to the most

effective social housing providers.

Commonwealth funding should be used to

help develop a less homogenous social

housing system, comprising a variety of

different types of organisations. We do not

believe there is a single ‘silver bullet’

solution, rather a number of different

pathways to follow. This is because both

housing need and existing social housing

properties vary considerably.

Management outsourcing

There are clear benefits to increasing the

proportion of social housing managed by

contemporary, business-like not-for-profits

such as Housing Alliance members. This

will lead to a more strategic managementof assets, and the delivery through a mix of




20

public and private funds of newly

constructed affordable homes.

We need to move to a situation where

State Governments are not near-monopoly

suppliers of social housing. A target mightbe the 2009 goal agreed between State

and Commonwealth Housing Ministers of

35% of the sector managed by community

housing providers. This suggests transfers

of around 18,000 public housing dwellings.

Our view is that the main approach in

future should be a greater outsourcing of

tenancy management. This is an approach

that needs to be enshrined in a reformedNAHA rather than be carried out piecemeal

by some States, with CRA implications.

Outsourcing is an ideal solution in regional

areas. Remotely located housing is very

expensive for State Housing Authorities to

manage, whereas community housing

providers already have local infrastructure

available in regional towns.

Housing Alliance members have

successfully delivered manageably-scaled

management outsourcing projects. Homes

North, for example, received 150 homes in

Gunnedah in 2008. As detailed in Box 5,

they helped stabilise the neighbourhood.

Asset transfers

There has been a protracted and not

especially helpful debate between StateGovernments and community housing

providers on asset transfers. Certain States

believes such transfers may impair their

credit rating, though this is disputed.

Even with management outsourcing

approaches, there will be situations where

modest scale property development will be

necessary. Re-building may be more cost

effective in the medium term than

expensive restorations to ageing,

inappropriate stock. Housing may need to

be reconfigured to meet demand for

smaller properties. Also, in coastal areas

and in locations with a resource boom,

additional affordable housing is needed.

Government should put in place

mechanisms whereby assets ownership

can be transferred to properties that are

already managed by a community housing

provider. Transfer would be on the basis

that the provider would submit a business

plan compatible with Government goals,

and would need to report on the outcomes

of the scheme.

Regional housing transfers

Both the Commonwealth and State

Governments needs to consider carefully

the approach that works best for

management outsourcing. We recommend

that in many regional areas different

policies will be needed. If too many small

community housing providers operate in aremote region, social housing will not be

delivered efficiently and it will be confusing

for social housing applicants.

In metropolitan areas, and for large

estates, social housing management could

be transferred in medium sized blocks (of

say 200 to 1,000 homes) to larger

community housing providers. This would

be through competitive tender, making the

process transparent and ensuring best

value outcomes for State Government.

In regional areas, smaller social housing

parcels (of say 50 to 200 homes) could be

transferred to existing community housing

providers with a proven track record and an

established presence in the region. This

would allow these organisations to further

build on-the-ground capacity.




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Box 5: Homes North - building community cohesion

Homes North is an innovative not-for-profit socialenterprise delivering high quality housingmanagement and support for people on low tomoderate incomes in the New England and NorthWest region of NSW. They currently manage over850 properties under a wide range of programs thatinclude providing social housing to communitymembers who are disadvantaged in accessingprivate rental, alleviating housing stress by providingaffordable housing options to moderate incomehouseholds and providing specialist housing fordisability clients. Homes North also operate a rent-to-buy scheme in Armidale and Tamworth.

Homes North is also an important access point forhomelessness and allied services, this is particularly so in smaller regional locations where thereis no Housing NSW office. Homes North has built strong partnerships with services across theregion to ensure optimal outcomes for their clients and communities. They have a strong Board of

six skilled directors who are committed to delivering quality services and maintaining a robustfinancial model.

Homes North is committed to managing their business well so they can increase the supply ofaffordable housing in the region. They have acquired 15 properties over the past two years, andhave plans to acquire a further 20 in the next two years. These properties are for low andmoderate income households.

All administration, finance and reporting functions reside in Armidale and are managed by theChief Executive Officer and Manager Business Services. The Company also has a specialistasset management team in Tamworth, overseen by the Asset Manager, to ensure the efficientmanagement and maintenance of the asset base. Housing management is delivered through ourfour local offices: Armidale, Tamworth, Gunnedah, Glen Innes and Tenterfield.

Gunnedah Community Cottage

Under the ‘whole-of-town’ stock transfer programme in 2007-8 Homes North took on themanagement of the Housing NSW social housing portfolio in Gunnedah, approximately 150properties. Just under 100 of these properties are located in a precinct in west Gunnedah locatedon the “wrong side of the tracks”.

The area had a history of hard-to-let properties, vandalism and anti-social behaviour. As part of asuite of strategies to improve the quality of life for people living in the area and reduce overheadsfrom vacants and vandalism, Homes North opened a community cottage in the centre of theprecinct. Services and community development activities delivered out of the cottage arecoordinated by on-site Salvation Army staff.

Hope House now offers a range of facilities and services including a mother’s group, positive

lifestyle programmes, counselling services, budgeting, loans, community gatherings andcelebrations, a playgroup and opportunities for community members to volunteer and gain skills.

The upgrading of the house, gardens, outdoor areas and children’s playground was madepossible by significant donations from businesses and hours of volunteer work by local communitygroups. The cottage is a great example of community contribution, and was implemented at noadditional cost to Government.

Homes North extended its commitment to the project in 2013 by negotiating with the AboriginalHousing Office the use of an adjacent vacant block for a community garden. The derelict site hasbeen transformed into an orchard and vegie patch.

As a result of this and other strategies the precinct has become a regular place to live. The riots,vandalism and hard-to-lets are a thing of the past. Homes North is committed to making socialhousing a housing solution that provides life opportunities. The Gunnedah Community cottage istestament to this commitment.




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‘Managed’ transfers in regional areas

would be more straightforward and lower

cost. Government could carefully tailor the

transfer so costs could be cut, for example

by a ‘whole of area’ transfer where the local

State Housing local office is closed.

The Commonwealth could take a lead on

promoting regional considerations through

a renewed NAHA. This could contain

earmarked funding for regional areas, and

State Governments could be set targets

linked to continuation of part of their

funding from the Commonwealth.

Promoting alliancing

This submission has shown the many

benefits that a housing alliance can bring. It

is a common organisation structure in

Europe, and allows medium sized

community housing organisations to have a

sustainable role in supporting Government.

We suggest that during NAHA negotiations,

Commonwealth and State Housing

Ministers review their strategy for the

community housing sector. The Housing

Alliance believes there should be:

• Favourable treatment of community

housing providers who re-invest their

funding in the area in which they

operate. Inter-state and national

community housing groups should be

permitted, but not encouraged.

• Support for community housing

providers that remain close to their

regions and deliver a broader range of

services in their neighbourhoods.

Housing is a localised and we do not

believe large groups providing

community housing across a large

geographic area deliver best results.

The above changes could be brought aboutthrough modifications to NAHA funding,

and also a change to frameworks in the

National Regulatory System. Housing

providers could, for example, be required to

demonstrate how they support and add

value in the regions where they operate.

3.3 Developing our role as

community anchor

Housing Alliance members have retained

their strong bonds with the regions where

are based. They are good examples of

ways in which a high capacity regional

organisation can act as an ‘anchor’,

bringing together various public, private

and not-for-profit bodies within a district.

An example of this is the ‘whole of area’

transfer to Homes Out West in the Murray

River corridor in 2009. The management

of all 240 Housing NSW properties in nine

communities along the Murray River were

transferred, allowing Housing NSW to close

their Deniliquin office.

This transfer effectively reduced duplication

in these communities built on Homes Out

West’s capacity as a community anchor in

these rural and isolated communities and

was achieved in a cost effective and

succinct manner over a short three month

timeframe. Much of the success being

attributable to the organisation’s profile and

community connections in the region

Encouraging ‘anchoring’

The National Regulatory System

encourages community housing providers

to be well governed, and to efficiently

manage social housing tenancies. Any

additional support for tenants and

neighbourhoods is voluntary, and a

decision by community housing boards.




23

We believe Governments should support

community housing providers to do more

within their neighbourhoods. Well-

functioning neighbourhoods communities

minimise cost to Government for the

provision of social services. This could be

achieved by Commonwealth and State

Governments partnering with community

housing to ensure capacity is built that

delivers better outcomes for local areas.

Less proscriptive options could be to

establish a central exchange for best

practice, include ‘community anchor’

options. To achieve scale economies and

consistency, this would work best as asingle national approach. Potentially this

could be delivered by the Community

Housing Federation of Australia.

Supporting employment

Many regional areas lack a strong and

diversified employment base. Regional

community housing providers can have an

impact in terms of:

• Our role as a local employer, especially

in offering high skilled and higher paid

jobs than available locally.

• Our role as a purchaser of local trade

and other services.

• Our ability to source goods locally.

Regional community housing providers

have a proportionately higher impact in

these areas than a metropolitan based

organisation. We are also more able to

help establish and mentor local social

enterprises that may provide services such

as grounds maintenance that we procure.

There are good examples from the

community housing sector of programs that

help their tenants’ transition into both

training and employment. They are able,

therefore, to consider both short term and

long term tenant needs.

The Commonwealth Department of

Infrastructure and Regional Development

needs to incorporate a strategy for localeconomic development that takes into

account the role that contributions of

regional community housing providers.

Building community cohesion

Community housing providers are

considerably smaller than State Housing

Authorities, and able to maintain closer and

more personal links with their tenants.Problem tenancies can be identified

sooner, and tailored action taken in

partnership with welfare agencies.

All Housing Alliance members involve

tenants in some aspects of running their

business. Some have tenant representative

groups that impact decision making.

Tenant social events, barbecues and

information sessions are also common in

community housing.

Tenant participation programs both allow

tenants to feel a sense of ownership and

involvement, as well as the housing

provider understanding what is working

well in their services. Regional community

housing providers can make a significant

impact on building community cohesion in

the areas in which they operate.

3.4 Broadening the funding

base

The social housing system is under-

resourced, and funding for new affordable

housing is limited. Both State and

Commonwealth Governments are looking

to balance their budgets, hence other

funding sources are needed..




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Box 6: ‘The hub’ – a collaborative and integrated approach

In 2008 Homes Out West and a range ofother community service organisations in Albury shared a common vision to createa specifically designed and integrated

‘Hub’ or ‘One Stop Shop’ for peopleexperiencing housing related stresswithin the Albury community.

This was to be achieved via the co-location of a number of independenthousing related service providers andwas intended to enable the sharing ofvital infrastructure resources to createefficiencies in service delivery and longterm cost savings. The primary goal wasto enhance service provision to peopleexperiencing or at risk of becoming

homeless.Ongoing negotiation bought together fourdistinct agencies which collectivelycomprised all of the community based(non-government) non-residential,homelessness services within the city of Albury. Partners included Homes Out West, YES Youthand Family Services, Albury Supported Accommodation Service and South West Tenants AdviceService.

All four services faced the challenges and concerns regarding financial restraints, suitability andsustainability of long term office accommodation. A project that would enhanced service provisionfor clients, improve conditions for staff and allow like services to obtain reasonable security oftenure in the long term, with the very real expectation of future cost savings became anincreasingly attractive option for agencies to become involved in the development of ‘The Hub’.

Improved client services are central to The Hub and the collaborative and integrated approach.The significant issue for clients regarding access to housing and support is addressed in ‘TheHub’ co location model. The model has provided clients with ready access to a full range ofhousing and support services under the one roof, from early intervention to long term housingoptions. This is both convenient for them in terms of time and resources (i.e. transport), but alsoincreases the likelihood of clients engaging in assistance due to the improved ease with whichthey can access services. Put simply, a referral across the hallway is far more likely to result inclient engagement than a referral across town.

The success and efficiencies of The Hub has improved all partners capacities, freed up resourcesand allowed services to be innovative and effectively respond to new initiatives and growth

opportunities that have arisen since co locating in 2009.

Funding innovation

To achieve the level of growth in affordable

housing supply, which is badly needed,

COAG, working with partner agencies

should identify and pursue new and

alternative funding mechanisms. The

growth required will not be fully addressed

without additional funding as well as the

creativity to work better with what we have.

Various options have been discussed,

mainly within the research community:

• Superannuation funds. Funds haveconsiderable amounts to invest, though




25

potentially need legislative push or tax

incentive to channel long term funding

towards affordable housing.

• Housing supply bonds - based on a

partial guarantee of risk on a slice of amarketable bond instrument targeting

affordable housing supply. Guarantees

and administration could be by State

Government, with the Commonwealth’s

role to help establish a national system.

• Social impact bonds - this is an

approach that works well overseas to

source new forms of investment, with

the investor not receiving a return untila series of social outcomes have been

achieved. This approach has the

benefit of a focus on outcomes that can

be measured.

• Revolving finance. This would involve

providing finance to community housing

organisations at below-market interest

rates on the condition that these funds

are used to generate new affordablerental housing.

We recommend COAG review these

financing options which are based on tried

and tested approaches in Australia and

overseas. Raising external private and

philanthropic funding reduces the burden

that otherwise falls on taxpayers.

Much of the background work has already

been undertaken. KPMG prepared a reportfor the Victorian government in 2012 which

outlined nine possible funding models for

governments to consider when developing

new social and affordable housing. Their

main conclusion was that community

housing providers were the most effective

way to harness new forms of finance.

The Commonwealth’s role is not

necessarily to administer or fund these newfinancing approaches. Rather, schemes

could be promoted through leadership,

passing enabling legislation, funding pilot

projects and evaluating outcomes.

Community housing benefits

Many community housing groups, including

Housing Alliance members, raise bank

loans to develop new social and affordable

housing. These approaches are more

familiar and straightforward than the new

funding models suggested above.

We recommend the Commonwealth gives

leadership in developing a strategy so

higher capacity community housingproviders can borrow to their optimum

capacity. To date, there have been mixed

messages from Governments on how they

see the longer term role of the community

housing sector. This does not encourage

significant external investment.

Secure the future of NRAS

Housing Alliance members have had

significant experience in using NRAS

incentives to develop affordable housing.

The subsidy works in regional areas, and

can provide a type of dwelling the market is

unable or unwilling to develop.

Despite a few administrative problems with

the NRAS scheme, we consider it to be

good policy and one that is capable of

helping address the housing affordability

challenges at modest cost to taxpayers.

We recommend NRAS is retained, though

streamlined and made more effective.

There needs to be certainty that the

scheme will be in place for many years to

come, and allocation rounds need to be a

scheduled annual event. Providing student

accommodation and the use of negative

gearing by investors should be avoided.




The Housing Alliance recommend Australia

follow the approach of a number of US

states where there is also a similar tax

credit style scheme. Allocations are

managed such that they are targeted to

where they are most needed. If adopted in

Australia, this would allow a fairer

allocation of NRAS to regional areas.

Regional targeting

Housing markets are more complicated in

regional areas. There are fewer builders,

costs are higher and new stock is often

larger properties as they attract higher

margins. The planning system does notwork as well for affordable housing, in part

as land values are lower than large cities.

Regional community housing providers

deliver affordable rental housing in

locations where it is most needed, not just

where it is profitable to develop. This often

involves working very closely with local

councils, and in partnership with private

sector developers.

Alliance members Housing Plus and NCCH

have a strong track record of producing

new affordable housing, including the use

of bank loans and NRAS incentives. It is

unlikely this much-needed housing would

have been provided without their

involvement. Nor would it have happened if

they were part of a merged entity with a

distant head office.

Where possible, Commonwealth and State

Government needs to carefully target

funding so that new affordable housing

remains viable in regional areas. Policies

and funding should take account of the

different housing markets across the

country. This is particularly true in areas

impacted by the resource boom.

3.5 Section conclusions

Community housing providers have a role

in providing social and affordable housing

as well as more generally in regional

development. Sustainable regional

economies drive national economic growth.

Viable regional housing markets can

reduce the flow of people to capital cities,

and mitigate the need for very high levels

of spending on urban infrastructure.

The main issue of the Commonwealth is to

provide strategic leadership, promoting a

functioning housing continuum for low,

moderate and higher income households.

Left to the States, the delivery of social and

affordable housing will continue to be sub-

optimal with high administration costs.

Housing Alliance members have taken the

lead in the communities we serve. While

we do not claim to have all the answers, we

can work collaboratively with all levels of

Government to deliver better outcomes for

regional Australia.